Dynamic pressure drop after regulator?

About a week ago I installed Conbraco Series-36 pressure regulator.
City water pressure is 90+psi. Static pressure right after the regulator
is 50psi (default setting). Whenever water is used City pressure stays
about the same but pressure after the regulator (pressure gauge is
about 5â€ away from the regulator) drops down to 40psi or even 30psi
(depend on water usage). This is totally unexpected behavior. At the
far end (next to open faucet) pressure may drop significantly (even
down to 0psi) but right after the regulator it should be close to the
whatever it set to (50psi). Am I right? All my plumbing pipes are 1/2â€
and closest faucet is about 15-20 feet away.
Something is wrong with this picture but what?
What should I check and how to correct/fix this problem?
Is my regulator simply broken and must be replaced?

The only way the pressure after the regulator can drop is if the demand is greater than the regulator can deliver. Your 1/2" pipes should not be able to draw that much water, so the assumption is that the regulator, the control valve ahead of it, or the water line to the regulator is deficient.

OK,
pressure right before the regulator is always 90+psi static or dynamic
regardless of water usage. Pressure right after the regulator is 50psi
static and drops down to 30-40psi as soon as water is used. Looks like
the problem is regulator itself.
Is this correct assumption?
This is Conbraco, Series-36 regulator and it is only a week old.
Problem started immediately after I installed this regulator, so it is
very unlikely that strainer already is clogged.
Is this just my luck or Conbraco regulators are not good in general?

Strainer looks nice and clean.
I tried to setup 50psi dynamic pressure wile water was running and
noticed strange regulator behavior â€“ it kind of was trying to avoid
setting between 40 and 50psi. In direction â€œfrom low to highâ€ pressure
was smoothly increasing up to 40psi and then jumped to a bit above 50psi.
The same story in opposite direction â€“ smoothly goes down to 50psi and
then jumps to 40psi. As of now I set pressure to 50psi dynamic. Static
pressure is a bit over 60psi â€“ not too bad. But this does not look right. Should I replace regulator?